APPENDIX A
SCENARIO NARRATIVES

ALTERNATIVE SCENARIOS PLANNING PROCESS

As collaborative tools, scenarios allow multiple stakeholders to address
issues such as sustainability that do not conform to typical "expert
report" solutions. Sometimes, issues and solutions are clear; the problem
of a broken leg and what to do about it is a good example. Alternatively,
the issue may be clear, but the solution is not; with arthritis, the
patient and doctor know the problem but are not sure of the treatment. In
other situations, like sustainability, both the issue and the response
are unclear. Here, the definition of sustainability--and the
solution--lies with stakeholders; experts only advise because the
economic, environmental, and social dimensions of sustainability
transcend any single discipline.

Scenarios are powerful tools for putting the world in a fresh light and
to explore new ideas, such as sustainability. What wind tunnels are to
new airplane design, scenarios can be to future energy and transportation
strategies: instructive simulations of possible operating conditions. As
wind tunnel testing leads to a stronger, faster airplane, scenarios can
help put the nation on a more sustainable path.

This approach, is extraordinarily valuable in its ability to address the
nature of sustainability. "Sustainability" implies a future condition of
society in which technology is in harmony with the natural world,
economic needs are met, and social equity and justice are assured.
Instead of dealing with present disagreements, scenarios help to help a
consensus--a shared vision--about a sustainable future.

The Sustainable Energy and Transportation Scenarios Project yielded
important lessons that were critical to the development of the Energy
and Transportation Task Force goals and policy recommendations for the
Council's consideration. The Global Business Network, a consultant with
considerable experience developing scenarios for strategic and policy
planning, was retained to facilitate the project and help provide
management and logistics support.

The project began by drawing together the wealth of existing research to
understand the dynamics shaping the energy and transportation sectors.
Members identified the factors and elements that significantly influence
energy and transportation, including economic structure and performance,
environmental issues, degree of social equity, technology developments,
population changes, land use and community design, societal values, and
political developments.

These so-called driving forces were combined in different ways to lay out
15 preliminary paths--scenarios--these sectors may take by the year 2025.
After further research and information gathering, members more fully
developed and refined alternative scenarios. (As part of the Council's
regional visit to the Great Lakes area in July of 1994, Council members
and the public were given the opportunity to comment on the scenarios
project and the progress to date.) Later, characteristics of energy and
transportation use in each scenario were assigned numerical values
according to the "plot" of each scenario narrative. These characteristics
were modeled to compare the energy and transportation use patterns of
each possible future. As a reminder, scenarios are not predictions: they
describe how the future "might," not "should," unfold.

THE WAY WE ARE

This is a world where gradual change continues, but the future is not
necessarily a mirror of the past. The restructuring of the global economy
is the major force shaping this scenario. Fragmentation, not cooperation,
keeps people's lives a bit unsettled. Event with mixed signals, however,
incremental improvements abound giving most people, but not all, a sense
of progress. A shifting job market in the United States and the resulting
underemployment keep real incomes stagnant in many sectors well into the
new century. In this world, people are more mobile, but also face
increasing congestion. Although energy stays relatively abundant and
cheap, other issues, including environmental concerns, encourage
protracted policy debates. Looking back from 2025, observers would note
that most Americans are better off, in part due to technology instead of
rapidly increasing incomes, but remain concerned about chronic social
problems and a latent perception that the United States is no longer the
world's leading economic power.

On June 10, 2000, the Economist's cover story on "America: Boom, Bust,
Muddle...or Work Still in Progress?" described the restructuring economy
of the U.S. With the pace of industrialization accelerating among "newly
exporting countries," (these include: China, other Asian nations, Latin
America), the advanced industrialized countries were caught in mature,
but slow growth patterns. overall productivity was relatively flat.
Furthermore, a continuation of trends present in today's economy
(including corporate restructuring, increased foreign and domestic
competition, higher returns to education, etc.) meant that modest
increases in real income experienced in the United States were
increasingly unevenly distributed.

Southern California in 1994 foreshadowed the economic future of the
United States: large firms downsized and moved manufacturing operations
to less costly states, while new, small manufacturers, including
high-tech, employed low-cost labor (many immigrants) and paid limited
benefits. Economic activity was becoming much less cyclical because of
the globalization of production and finance as well as the impending
convergence of factor costs between the developed and developing world.
The inventory dance, which had been a major business cycle driver, was
nearly gone, undermined by just-in-time production paradigms and an
enormous supply of substitutable capacity in the world market, easily
accessible through information technology. The cyclical dance of
inflation and higher interest rates was similarly subdued by global
capital markets--but so were most real wages in the United States as
global competition demanded tight cost controls. Overall, U.S. population
growth continued, albeit slowly, as the Sunbelt and the Northwest grew
rapidly and immigration remained steady. In developing countries,
population continued to burgeon and environmental problems, such as
drinking water and air pollution, increasingly plagued nations.

Internationally, developing countries generally followed the U.S. model
of industrialization but the pace was more rapid; persistent conflicts,
however, inhibited closer political and economic ties, including expanded
trade with partners like Japan. On the positive side, advances in
technology and its diffusion allowed faster infrastructure development in
many countries compared to historical patterns. By 1994 in China, for
example, a country with limited telephone service, pagers, and telephones,
were linking this emerging giant with the global economy. But on a
pessimistic note, the United States and other industrialized countries
were troubled by chronic conflicts across the globe, as a new world order
evolved far more slowly than anyone imagined following the end of the
Cold War. The U.S. was stuck paying world policemen more than desired
because without its leadership cooperative multilateral partnerships were
difficult to establish.

Far from being discouraging, U.S. productivity started to improve by the
late 1990s thanks to the expanding use of information technology.
Throughout the end of the 1990s, new entrepreneurs and small businesses
proliferated and grew as work-at-home and telecommuting increased (which
also allowed suburbs to continue expanding). Exports of services
continued to grow rapidly as financial and education-entertainment firms
sold bytes not goods. By 2015, the value of services easily dwarfed the
value of trade, much like capital flows overwhelmed goods in the 1980s.
"More with less" became the corporate maxim of the new century. But there
was a cost: unequal growth in jobs and incomes. Fewer higher paying jobs,
longer retraining transitions, and stagnant real wages kept many people
frustrated, particularly in urban areas.

Primary energy remained relatively cheap and abundant. Oil imports to the
United States continued to account for a high percentage of supply as the
world price stayed relatively low (in the $20-28 per barrel range). The
supply of domestic coal was never in doubt and natural gas reserves
seemed to be replenished with modest price increases. Retail wheeling in
electricity took off slowly, as states and public utility commissions
argued over jurisdictional issues. Natural gas share of generation slowly
increased, as independent power producers (IPPs) grew. Efficiency
gradually increased in most energy sectors. Technological improvements
also were evident, enabling improved oil recovery and clean coal
techniques in particular.

Existing land-use patterns continued, as the fast growing edge cities in
the suburbs sprawled across the country. Much of the growth was away from
decaying urban cores, where high unemployment, persistent social ills,
and decaying infrastructure stymied redevelopment plans. Some cities,
like Portland, Oregon fostered local urban growth and the Empowerment
Zones implemented in 1994 proved to be an effective catalyst for growth
in the cities where they were established. Improved telecommunications
allowed growth to spread into rural areas as jobs and corporate
operations shifted locations to control costs. Automobiles remained the
primary transport mode, but vehicle miles traveled started to flatten by
2010 as growing traffic congestion and telecommunications
(shopping-at-home made a difference) affected transport volumes.
Transportation energy use began to decline as more efficient vehicles,
developed by the Partnership for a New Generation of Vehicles, started in
1993, became a larger part of the vehicle fleet. America's continued love
affair with mobility and freedom made gas or other energy taxes
politically unfeasible, although some small increases were pushed through
primarily to generate revenue to fix roads and bridges.

The greatest successes were political as the economy and persistent
social ills forced protracted, if not polarized, policy debates. While
real incomes grew slowly in the United States, the benefits of this
growth were distributed unevenly. Lack of investment in infrastructure
(let alone rebuilding) continued in most cities as budgets were tight.
Chronic urban problems increased antagonism between federal, state, and
local governments as viable solutions were not forthcoming. Violent crime
fell slowly, due, in part, to the "three strikes, you're out" initiative
that spread throughout the United States but also because of the simple
demographics: fewer at-risk youth and young adults. Nevertheless, high
crime levels persisted overall as the "have nots" grew across racial,
gender and class distinctions. Education improved in most parts of the
country, partly driven by the information superhighway, but disparities
in access and knowledge levels continued to divide America.

In this world, the environment was only one of the many competing issues.
As developing countries grew, pollution and a gradual destruction of the
environment (air, water, forests, habitats) were increasingly evident,
especially because global competition favored cheaper, less efficient,
dirtier technologies. While global greenhouse gas concentration continued
to increase, the U.S. emissions growth rate proved difficult to decrease.
Air quality slowly improved in many urban areas, including Los Angeles
(e.g., the Clean Air Act standards were attained in most cities
post-2010), as tighter rules and cleaner cars made a difference. However,
both ozone and particulate levels remained at levels close, though
generally below, the legal standards. Many local areas addressed their
own environmental issues, such as drinking water, but coordination at
state and federal levels was fraught with delays. Politically, frustrated
voters brought forth multiple candidates for public offices at all levels
of government, a new trend that marked differing interests and agendas.
While most Americans felt better off in 2024, many still feared for their
lifestyles and jobs as a new world economy continued reshaping the map.

Increasing gap between rich and poor, both nationally and
internationally.

Persistent regional conflicts internationally.

On the first Earth Day in 1970, Time magazine declared "The Decade of the
Environment." But while environmental issues were very much on the larger
political agenda, two oil crises, double digit inflation, a volatile
economy, and stagflation all helped to move the environment issue away
from center stage. In the 1990s, sustainability once again became a major
political issue, but in competition with an array of stubborn social
problems, all demanding immediate attention and resources. Deja vu? Some
feared a similar tale--that the environment would fade again--but others
saw a value shift toward a broader social context and understanding of
sustainability. Indeed, history did not repeat itself but instead
followed a new script for the next 30 years.

A widening income gap was a major driver. Most income growth was
concentrated in the upper 20 percent of households, which produced a
skewed distribution. From the 1970s to the 1990s, the middle class shrank
while the poor and the working poor increased proportionally. There was
no universal consensus about the cause of this trend, but many cited slow
economic growth, changes in the tax code, and reductions in social benefits.

Inclusive Development

This is a world where social and economic priorities overwhelm
environmental ones, at least temporarily. Over the course of the 1990s, a
new social consensus emerges in the United States that acknowledge that
the widening gap in incomes and advancement opportunities is not
sustainable. In part, this consensus is driven by a growing lower-middle
class, which increasingly crosses racial and gender distinctions, as well
as by a restructuring economy which disenfranchises traditional
workers--the heart of middle America--who face fewer and lower paying
jobs. The groundwork for this scenario was laid in the 1970s, when the
average American made limited economic progress, real income growth
slowed, and many began sliding backwards. As the trend continued into the
1990s, concerns about social justice came into the forefront--a concern
that already motivated many environmentally concerned citizens. The
Inclusive Development scenario presents the story of a new political
bargain that delays the timing of environmental
progress.

Industrial restructuring was another critical factor. For years, the U.S.
economy had been moving away from manufacturing towards services and
information-based jobs. The problem: transitions took time, often with
significant costs. Many experienced job and income losses in the 1980s
and early 1990s as firms downsized, jobs went abroad, and benefits were
cut. Behind these changes was the battle over a share of the economic
benefits between workers, capital (both equity and debt), and consumer
value. The interests of workers were on the losing end as the dream of
ever-increasing standards of living was effectively shattered, and leaner
companies battled global competition with fewer workers.

As the 20th century ended, growing international market competition and
persistent regional conflicts buffeted clear policy choices. While trade
conflicts between the United States and Japan continued, the Asian
"tigers" continued to worsen and interest rates slowly climbed to keep a
hold on inflation (yet at a price: slower growth). For the average
worker, frustration with jobs translated into dismay at foreign policies
and the appropriate U.S. role, as in Rwanda and Haiti, even Cuba.
Immigration slowed as officials tightened entry policies. But historical
isolationist--and protectionist--tensions grew as the U.S. economy
sputtered with GDP growth stuck in the low two percent range.

The decline of inner cities in the 1960s-1980s spread outward to many
inner suburban areas in the late 1990s as more households fell out of the
middle class due to the loss of higher wage manufacturing jobs and
replacement by lower wage service employment. New housing and job growth
was concentrated in a new third ring of automobile-dependent edge cities
and suburbs, which stimulated a continued rise in vehicle miles of
travel, vehicle trips per capita and suburban traffic congestion.
Transportation investment continued to fall short of the growth in demand
while federal tax policies and local zoning regulations continued to
encourage low density development. The share of jobs accessible to public
transportation continued to fall through the 1990s, excluding many urban
workers from employment opportunities and leading to a shortage of labor
for lower pay service work in many affluent outer suburban areas, where
affordable housing was often excluded by local policies.

By 2000, the growing number of disenfranchised reached a political
crescendo. Rallies and picket lines protesting worsening inequities,
combined with widespread frustration over environmental problems that
disproportionately affected the poor spurred a nationwide campaign to
address the social and economic issues effectively. In 2000 the social
justice agenda was echoed in multi-candidate election campaigns in nearly
every state, in the mass media, and by a growing percentage of the public
(especially those with new, lower paying jobs). National political
parties fractured to include and redress these issues. Environmentalists
often found their agenda blocked by those who would bear the costs most
heavily. Economic and social concerns about such issues as education,
crime, drugs, and unemployment pushed aside most environmental issues,
though battle scars of long time advocates were long and deep. By 2002,
the fading memory of the near victorious anti-NAFTA coalition between
environmentalists and labor led advocates on both sides to propose a new
social compact: poverty first, then the environment. Businesses adjusted
to this new compact by giving more in wages and benefits to workers,
raising prices, on many items and delaying costly efforts to protect the
environment.

The strong trend toward deregulation and free market solutions to
economic issues slowed dramatically, as regulators were forced to
consider job impacts. Evidence became clear as the movement toward retail
wheeling in electricity markets was slowed dramatically and only a
piecemeal program of wholesale electric wheeling was allowed. In the
transportation sector, job creating highway and urban mass transit
systems were broadly supported at state and local levels.

By late 2002, a series of gradual reconciliations to unfold as specific
policy steps. The Administration was confronted with a clear consensus to
improve economic growth--even at the expense of environmental issues; to
ameliorate the pain of economic restructuring and facilitate necessary
labor force transitions; to shift the tax burden toward the better-off,
and finally, to seriously address chronic social concerns. Although most
of these issues had been part of the broader agenda of the early 1990s,
the political will, backed by clear popular support, had been lacking at
that time.

This shift in values toward broader public concerns was not unprecedented
in U.S. history. Arthur Schlesinger Jr., in his book The Cycles of
American History, suggested how the pendulum swung between private
and collective phases. After decades of focusing on private lives, social
costs accumulate and create pressure for a renewed focus on the public
realms, and vice-versa. The two decades of the 1970s and 1980s, he
argued, were characterized by personal and private concerns which led to
a "swing" back as America entered the 1990s.

The first hurdle was Congress. There was strong resistance to the
Administration's proposals. The "no more taxes" and anti-income
redistribution sentiments were still very much alive. Many believed that
social problems should be solved at the local level; that individuals
should be responsible for their fate in life; and that there was no role
for the federal government. The Administration proposals could not get
past the filibuster.

By 2004, a new Congress emerged, heavy with representatives of the
emerging social consensus. The decimal census of the year 2000 and
resulting redistricting brought a sufficient majority to pass
Administration proposals. As new policies and resources started to flow
to local communities, the sense of hopelessness started to lift for many.

Technology, education and training, and reforms in governance all played
a key role in bringing about this new social agenda. New public transit
technologies became a vehicle for both job creation and improved living
conditions for those with limited transit options. The information
superhighway played a key role in providing an easier way for the
formerly disenfranchised to be heard, as voting by phone and other
communication techniques were used to access voters. A re-emphasis on
quality education penetrated even tough urban communities, which, along
with targeted investment programs, began to turn the tide against crime
and to improve the quality of lives. As the sophisticated service economy
developed more stable, high value-added jobs, wages began a virtuous
circle upward. More often than note, reduced environmental impacts were a
side benefit.

Limited innovation or change was evident in energy sectors. Oil was
relatively cheap (in the $19-25 range), while oil imports to the United
States remained high. More efficient energy and transport changes were
hampered as a result of reduced research and development funding and
capital investments, resulting from shifting funds in the federal budget
towards social programs. Utility deregulation was limited, as public
utility commissions were increasingly concerned with access, service, and
cost considerations. Natural gas shares in power generation continued to
slowly increase, primarily for peak load generation. The price of
alternative energy continued to decrease, but slowly, and their share of
generation (as well as vehicle fleet penetration) grew slowly. Limited
technological progress and efficiency gains were achieved by 2010.

By the later years of the first decade of the 21st century, a new social
compact was clearly in place. A combination of public policy, individual
responsibility, and economic evolution was producing strong economic
growth, renewing the sense of community, and accelerating the creation of
good jobs. For example, the rebuilding of urban infrastructure provided
many jobs. The gap between the top and bottom income brackets had
narrowed, not by lowering the top but by bringing up the bottom. Somewhat
more restrictive immigration policies led to the stabilization of U.S.
population. This helped, in part, to focus public and private resources.
Now that a solid economic and social foundation had been reestablished
and standards of living improved, a broader agenda, including the
environment, began to unfold.

Internationally, the U.S. lead in addressing equity concerns was not
mirrored by most developing countries, as the high returns needed to
attract risk capital for economic development dominated their agendas. By
2010, however, growing social problems and resource conflicts throughout
the globe convinced many leaders to reconsider domestic priorities.

Following a decade of further debate, research, and innovation, another
stage of social-environmental consensus emerged around 2015, accelerating
environmental progress. New economic indicators measured, among other
things, industrial throughput (e.g.,new measures of efficiency and
waste), natural capital use, and quality of life. Moreover, the
"greening" of America, was mirrored overseas. Europe had struggled with
the same question as the United States and had followed a similar path.
By 2025, many industrialized nations were stronger economically, more
equitable, and living in greater harmony with nature, although few
developing countries had achieved similar stability and balance. But a
question lingered in the minds of many policy makers. Did this same
social and economic development logic apply to the richer old millions of
the industrialized world and the poor young billions of the developing world?

EARLY INDICATORS OF THIS SCENARIO

Current difficulties of moving environmental legislation.

Growing social problems.

Concern about the distributive impact of costs.

Election of Clinton/Gore in 996.

Growing political power of social/equity non-government organizations.

On October 17, 2001, Hurricane Daniel slammed into North and South
Carolina, with insured losses totalling more than $30 billion, almost
twice those from Andrew in 1992. The following year Hurricane Barbara
struck the Gulf Coast, with losses of "just" $10 billion, but the major
story was the typhoon and tsunami that hit Japan causing damaged well
beyond $300 billion. When combined with an increased frequency of
droughts and heat waves in the Midwest, scientific and public concern
about climate variability was heightened further. During the late 1990s,
for the first time in recent history, severe crop losses and rising
agricultural prices had surprised the nation. As the nation reeled and
the insurance industry pushed for more federal insurance coverage for
natural events, Hurricane Chelsea smashed into the mid-Atlantic in 2003,
causing 1500 deaths and $50 billion in estimated damages as far inland as
Philadelphia and Washington. This series of events, along with similar
weather volatility in other parts of the world, produced turmoil in major
global capitals as political leaders struggled with appropriate
responses. But far from a "surprise" attack, scientists and
meteorologists showed that the stage had been set for some time.

Scientific evidence, based on the latest "complexity" models of
atmospheric change, showed that the increased climatic variability was
indeed probably the result of greenhouse gas buildup in the atmosphere,
principally the release of carbon dioxide (CO2) from fossil
fuel combustion. But scientists remained incapable of making specific
predictions about the rate and magnitude of global change, and how such
changes might be distributed. For Congress and the Japanese Diet,
however, the short-term economic consequences were pretty clear: a
decimated insurance industry; major financial losses and weak stock
markets; and a need to create large deficits. This combination put the
world economy into a mini-tailspin, to say the least. In the U.S.,
environmental and technological progress slowed as government-led crisis
management made things worse before any improvements could take hold.
U.S. economic growth dropped to 1.5 percent for the rest of the decade
and only slowly started creeping upward by 2020.

ECO-CRISIS

In this future, the onset of global climate change is characterized by
increasing weather variability and turbulence, which quickly reaches
crisis intensity by the year 2001. This phenomenon is not limited to the
United States, as Asia (particularly Japan), Europe and other parts of
the globe are hard hit. Following close behind are two nuclear accidents
in Europe, which surprise and shock the world. The response in the
international community is a realization that closer cooperation, not
competition and further fragmentation, are the key to future survival and
prosperity. A series of steps, which move beyond strictly environmental
concerns to include trade and security, is taken to restructure and
ensure a more harmonious relationship between the environment,
industrialization, and economic development.

The response in the United States, quite apart from emergency actions,
involved a series of measures in 2004 addressing climate change, including:

Immediately restricting greenhouse gases and other climate change
agents, at high cost to many industries.

Implementing an extensive biomass energy program, including
reforestation of some areas and the halting of old growth logging.

Supporting broader research in long term health, agricultural, and
ecological effects of raised CO2 levels.

Just as parts of the U.S. economy were reviving in 2007 (cyclical versus
longer term recovery due to recessionary impact of policy measures), two
nuclear accidents effectively eliminated the nuclear option as a workable
response to climate changes. In one accident, a severe cold spell in the
depth of winter pushed electricity loads to record highs and a reactor
vessel head failed in a generation station. These accidents, although
shocking, had their greatest effect in convincing U.S. leaders that
substituting nuclear power for fossil fuels was not viable.

In the aftermath of the climate and nuclear crises, extensive emergency
and longer term policy measures were enacted in the United States, with
similar measures being adopted in other countries. While a new global
environment summit was being held in 2008 (which, among other things,
strengthened the Framework Convention on Climate Change), a
"Sustainability Act" was passed quickly by Congress with bipartisan
support. Because this comprehensive bundle of sustainability policies was
carefully researched during the 1990s as part of an ongoing debate about
sustainability, it had the advantage of not being thrown together as a
panic measure. The legislation included, among other things, carbon
taxes, removal of subsidies for fossil fuels, transition "packages" to
assist particular industries, subsidies for wind, solar, and battery
storage energy systems, large investments in public transit, various
taxes to discourage auto use, and measures to address social equity
issues, such as sector job losses.

Various energy sectors were hard hit, with most in transition. Oil prices
jumped quickly due to CO2 taxes, with oil imports declining as
a result. Most nuclear power was phased out over a 10-15 year timeframe.
Utility deregulation slowed, as government and transition programs took
time and resources to implement. Natural gas at rising prices
increasingly replaced a significant share of fossil and coal-fired power
plant capacity, based primarily on the grounds of efficiency, but with
only a relatively small reduction in carbon dioxide emissions. Renewables
gained the most, with increased research and development and government
support encouraging their growth. A major focus on new technology,
research and development, and efficiency was evident throughout the
industry, with many companies attempting to diversity assets and expertise.

Transportation and land use problems, however, continued to plague most
cities. The sharp rise in fossil fuel costs, along with lower income
growth, spurred many upper and middle class families toward pockets of
gentrification with better public and private transportation systems,
leaving many urban cores behind facing poverty and racial tensions.
Income inequality had indeed grown sharper. The irony was that higher
fuel costs also improved automobile technology and allowed more vehicle
options. Small electric vehicles, though limited in power and range,
became popular as short trip vehicles. Super lean burning hybrid vehicles
also entered the market fueled partially by gasoline and electric/natural
gas components. Motor vehicle use had continued to grow, despite the
crises, but at a slower rate.

The effect on the world economy was sobering well into the second decade
of the new century, as industrial transitions occurred over time. The
world economic growth rate was stuck between 1.5 and 2 percent during the
crises, although there was widespread cooperation and consensus on
economic stability measures. Population growth, both in the United States
and internationally, had slowed. Following the crises, industrialized
countries led the way with new measures of growth and prosperity that
were less throughput dependent. Most developing countries, however, were
stuck in traditional growth paradigms and stubbornly resisted further
cooperation; a major difficulty was enforcement and compliance in
environmental stabilization programs. This political dilemma between
industrialized and poorer countries perplexed leaders and paralyzed
closer global economic ties and new institutional arrangements. More
regional conflicts, particularly eco-wars, emerged by 2014 as acute
environmental degradation ignited resource conflicts. Industrialized
countries, including the United States, were not only frustrated but the
effects were felt economically with slow growth rates. What was heralded
as a new era of economic and environmental harmony at the global summit
in 2008 was caught in international bickering and endless talks. A level
playing field, let alone full global cooperation and enforcement, did not
emerge by 2025.

EARLY INDICATORS OF THIS SCENARIO

Continuing weather "surprises," for example, hundred year events.

Droughts in Midwest and parts of the Northwest.

Crop yields in Midwest declining.

Record number of forest fires, primarily in the West.

Increased frequency and severity of hurricanes in Southeast.

Evidence of decline or distress in various species as a result of
climatic pressure.

In late 1997, two major studies emerged linking birth defects and
children's health problems with environmental causes. The initial
reaction in the United States was shock, then outrage, especially among
young families (particularly baby boomers). State and federal government
agencies were deluged with questions and requests for more information,
and elected officials were put on notice to act. Far from being a
surprise, evidence had been building for some time. In the previous two
years, for example, more research had started to emerge concerning
health-related links to the environment. In one study, U.S. cancer rates
were shown to increase for each generation; in another study, in Norway,
birth defects were shown to have tentative links to environmental
factors. Both of these studies cited exposure to toxins, pesticides, even
diet, as possible key determinants. These and other studies, increasingly
popularized in the media, had raised public concern. While the birth
defect link was only one more example of environmental degradation,
somehow it was the final straw for many Americans. A grounswell of talk
and latent concern about the environment turned into more conscious
action and behavioral changes. Consumer reaction, for example, was
surprising: demand for green products and services grew by 24 percent in
the first quarter of 1998. Government and business leaders scrambled at
first--wondering whether this was just a short-term phenomenon--but
additional evidence linking lifestyles, health, and the environment
continued to emerge over the next couple of years.

The timing, in retrospect, was fortuitous, as the U.S. economy was poised
for significant growth from restructuring. Productivity, technological
innovation, and the development of new services from information
technology fueled the restructuring. Strong growth in late 1994 set the
stage, with traditional exports like manufactured goods growing and the
trade balance improving. But by mid 1996, the statistics told a more
interesting story: services were exploding and without any regard to
familiar trade patterns. Financial, information technology, and
education-entertainment services led the charge around the globe.
Statistical indicators of a new post-industrial revolution showed
sustained growth in overall U.S. productivity by 1997--and clearly
highlighted the long hoped for services productivity boost. Other
advanced industrial nations tried to follow the U.S. lead, with trade
discussions more likely to focus on new technological alliances rather
than heated agricultural bashing. By 2004, under the new World Trade
Organization, 120 nations signed an international agreement for broad
protection of intellectual property rights and information services.

ECO-ECO-TECH

This is a world of increasing environmental awareness linked with a
strong U.S. (and global) economy, technological developments, and
governmental initiatives to create cooperative "win-win"
solutions. Many of the pieces were already in place by the 1990s but much
like the advent of personal computers and their promise of increased
productivity, the network linkages and timing are key. Other developed
countries follow the U.S. lead, but equity disparities slow the rest of
the world. Unlike the previous scenarios, this world is driven by the
values of the baby boomers, who occupy top management and policy
positions and favor market and incentive-based approaches. But as this
scenario plays out, not everyone in society benefits from these
technological changes, and economic and environmental improvements.

Similar shifts were evident in employment statistics as service jobs
continued their historic climb. The big difference, however, was that
salaries were also rising. The supply of trained workers simply could not
keep up with rising service demand, which heightened upward wage pressure
(population, including immigration, was still growing in the United
States,but this did not translate immediately into more skilled workers).
By 2000, the Commerce Department revamped its statistical system, not
only to report services trade but also to integrate more environmental
full-cost accounting (including natural capital depletion) into national
accounts.

Technological innovation, and informational technology in particular,
were critical components of this shift. Information technology
effectively reframed the utility industry, for example, with California's
restructuring of retail electricity markets leading the country, and spot
and future price markets for electricity emerging nationwide by 2004.
Improved electricity efficiency reduced costs, expanded uses, and
provided more customer choice. The information superhighway made a larger
difference than most imagined by 2010, as education "tele-links" and
corporate telecommuting networks spanned the nation. Information
technology also had a significant impact on transportation; by the year
2000, automated traffic management schemes, such as the intelligent
vehicle highway systems, were operating experimentally in Chicago and
other major cities, not only to manage congestion but to reduce vehicle
emissions. National labs refocused on accelerated research and
development programs for environmentally appropriate technologies.

Growing traffic congestion, local government fiscal problems, and
continuing air pollution gave many communities incentives to make use of
new technologies and various demand-side reforms to improve local
transport and land use patterns. Various states were experimenting with
replacing property, event income taxes with alternative taxes on
gasoline, energy and automobile use. urban redevelopment efforts were
trying even more pilot projects, particularly to link transportation,
jobs, and housing in various incentive schemes.

Government by the late 1990s was playing a major role as a catalyst and
consensus builder. In response to growing environmental awareness, the
government restructured its approach to industry and provided new
programs and incentives. The emphasis shifted from detailed regulation to
sector-by-sector agreements and market-based legislation, including clear
targets for pollution reduction. The organizing principle became "level
playing fields," which ensured that companies received improved price
signals and that they could profit from eco-efficient innovations.
Federal technology partnerships, such as the Partnership for a New
Generation of Vehicles, with the "big three" auto makers, proved to be a
successful model. By 2004, a new era of government and business relations
was well under way, which recognized the compatibility of pursuing
economic and environmental objectives together. Indeed, these objectives
reinforced each other and generated even stronger economic performance in
future years.

Improved international relations played a small but important role as the
United Nations emerged more fully as an international arbiter and
security guarantor. Instead of a world policeman, the U.S. was able to
shift into a multilateral partner role in regional conflicts. Many
conflicts continued to flare, but a growing world economy defused most
with new assistance programs. The largest stumbling block, however, was
continued environmental degradation in many parts of the world, such as
continuing rainforest lost in the Amazon and widespread desertification
in Africa. New international incentives and "carrots" were proposed, but
compliance was simply lacking in many regions.

Energy and transportation reflected the changing paradigm of a
technologically driven economy, which by being more productive and
efficient, was alsoless dirty. Oil prices remained relatively low (in the
$20-23 per barrel range, due to low demand), while government and market
incentives pushed natural gas growth, renewables, and other alternatives.
A new national gas grid network emerged in the late 1990s, which allowed
Compressed Natural Gas-hybrid vehicles to penetrate the vehicle market
beyond the use in commercial and government fleets. Electric vehicles
were also a growing segment, with California mandates spreading across
the country. Competition forced major reconfiguration of the utility
industry as independent power producers, relying primarily on natural gas
and co-generation, increasingly dominated electric power generation. Coal
was still used for most base generation (using clean, gasification
systems), while nuclear was increasingly phased out as a result of high
costs and large centralized characteristics. Worsening suburban and urban
gridlock in the late 1990s spurred adoption of congestion pricing on
existing and new roads, smart express high occupancy vehicle energy and
more widespread telecommuting. New car designs dramatically reduced
vehicle energy consumption after 2000. Car design moved quickly to
incorporate elements of the "supercar:" hybrid mechatronic drive trains
powered by electricity; "clean" oil-based fuels or hydrogen; and
life-cycle production and recycling. New "leapfrog" supercar
manufacturers emerged with short product cycles and low overhead to serve
consumers who were willing to pay more for new, greener innovations.

By 2010, the American economic-environmental boom had increased the
standard of living for most citizens, although many inequities still
remained. Instead of using income and wealth as the traditional measures
of well being, the new economy was distinguished by knowledge,
information, and environmental quality of life, such as clean air and
water. Real wages were increasing for most workers. Total unemployment
continued to fall as the number of entrepreneurs and new businesses grew,
often out of homes with high-tech linkages. Urban cores and rural areas,
however, continued to lag as new "knowledge" skills left many behind.
High-tech redefined crime, shifting much of its focus to digital
networks, where boundary-less worlds were difficult, if not impossible,
to police. In general, the quality of education improved through computer
access and worker retraining programs. With universal health care
insurance in place by the late 1990s, most Americans were able to
increase their "green" spending and regarded concern for the planet as an
investment in their children's future.

EARLY INDICATORS OF THIS SCENARIO

Continuing health and environmental linkages research.

A broadening of lifestyle change toward environmental awareness.

Strong U.S. economic growth, especially in the high technology sector.